The Cost of Business Rates on Empty Properties Revealed

Posted on 10 April, 2013 by Neil Bird

For the first time the true cost of business rates on empty commercial properties has been revealed. A report released this week by the Taxpayers’ Alliance shows that, nationally, the figure for 2011-2012 was a massive £1.1 billion – a rise of 19 per cent on 2009-2010.

This burden on landlords began in 2007 when exemption for empty industrial properties was abolished and a previously extensive relief scheme was severely curtailed.

Subsequently, unfavourable economic conditions have made it difficult to find tenants for empty buildings, particularly in the case of retail properties, pushing the figure higher each year.

The report highlights that some landlords have even resorted to demolishing buildings rather than continuing to pay business rates on properties they have little prospect of letting in the current climate.

Another indication of the hardship being caused is that there are pensioners, who have invested in property to supplement their retirement income, who are now facing financial ruin.

Mathew Sinclair, the chief executive of the Taxpayers’ Alliance, believes that the government cannot continue to ignore the scale of the problem.

“It is extremely unfair that property owners are being hit with enormous business rates on properties which are empty, with no rent coming in that they can use to pay the bill,” he said.

This is not just a problem for landlords – many of whom are small investors rather than large portfolio holders – it has wider economic consequences.

“The rest of us lose out as the mere threat of having to pay rates on empty properties is discouraging people from putting money into new developments or refurbishing existing properties, which is undermining the prospects of economic growth,” Sinclair added.

The report is based on the amount of empty property rates collected by every council in England, Wales and Scotland and provides a full regional breakdown of the results together with some interesting statistics. For example:

  • Liverpool commercial property owners paid the highest empty property rates in the North West – £13.8 million.
  • In the East of England, Basildon property owners were the hardest hit – £6.7 million.
  • Bristol commercial property owners paid the most in the South West – £11.1 million.
  • In the North East, Newcastle-upon-Tyne property owners forked out the most – over £6 million.

Despite several leading coalition figures, including Business Secretary Vince Cable and Education Secretary Michael Gove, speaking out about the unfairness of empty property rates, the government has done little to relieve the burden.

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